APPENDIX 1 SCIENCE AND ENERGY DETERMINATION OF EXCEPTIONAL CIRCUMSTANCES - Department of Energy
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APPENDIX 1
SCIENCE AND ENERGY DETERMINATION OF EXCEPTIONAL CIRCUMSTANCES
DEPARTMENT OF ENERGY DETERMINATION OF EXCEPTIONAL
CIRCUMSTANCES UNDER THE BAYH-DOLE ACT TO FURTHER PROMOTE
DOMESTIC MANUFACTURE OF DOE SCIENCE AND ENERGY TECHNOLOGIES
“The United States needs resilient, diverse, and secure supply chains to ensure our economic
prosperity and national security.”1 Therefore, in order to “revitalize and rebuild domestic
manufacturing capability”2 as directed by E.O. 14017 of Feb. 24, 2021,3 and pursuant to the
Bayh-Dole Act, 35 U.S.C. §§ 200-12 (“Bayh-Dole”), the United States (U.S.) Department of
Energy (DOE) has determined that exceptional circumstances exist requiring increased
domestic manufacturing requirements for DOE Science and Energy Technologies4 to better
promote the policy and objectives of Bayh-Dole and to ensure America’s security and
prosperity by addressing the country’s energy, environmental, and nuclear challenges through
transformative science and technology solutions.
The U.S. Competitiveness Provision described herein calls for increased domestic
manufacturing to promote commercialization of DOE Science and Energy Technologies by
U.S. industry and labor, and provides stronger support for U.S. national security and economic
interests 5 while also maintaining the important core rights of small business firms and
nonprofit organizations to retain ownership and commercialize their federally-funded
inventions. The U.S. Competitiveness Provision is narrowly tailored to provide for
substantial U.S. manufacturing as a starting point in return for DOE funding, while still
providing flexibility for waivers, modifications, and alternative commitments to the U.S.
1
E.O. 14017 of Feb 24, 2021 § 1.
2
Id.
3
The Administration reaffirmed this policy in E.O. 14005, Jan. 25, 2021, Ensure the Future Is Made in All of
America by All of America’s Workers: “It is the policy of my Administration that the United States Government
should, consistent with applicable law, use terms and conditions of Federal financial assistance awards and
Federal procurements to maximize the use of goods, products, and materials produced in, and services offered
in, the United States.”
4
For the purpose of this determination, DOE Science and Energy Technologies include any Subject Invention
as defined by Bayh-Dole, conceived or first actually reduced in the performance of work under a DOE funding
agreement issued by one or more DOE programs under the cognizance of DOE’s Under Secretary of Science,
Under Secretary of Energy, combined Under Secretary of Science and Energy, or the Advanced Research Project
Agency-Energy (ARPA-E), such programs hereafter referred to as collectively as “DOE’s Science and Energy
programs.”
5
“[S]ufficient rights in federally supported inventions to meet the needs of the Government” is specifically
identified as a policy and objective of Bayh-Dole. See 35 U.S.C. § 200.
1economy, broad deployment and effective commercialization. This narrowly-tailored U.S.
Competitiveness Provision allows DOE to promote the policy and objectives of Bayh-Dole in
light of the exceptional circumstances that now exist and further the Department’s efforts to
create good-paying, American jobs to address energy and climate challenges while also
enhancing national security and securing U.S. supply chains.
It is vital to America’s security and prosperity that DOE’s multi-billion-dollar R&D
investments cultivate new research and development ecosystems, manufacturing capabilities
and industries, and supply chains within the U.S. DOE has a broad mission to “ensure
America’s security and prosperity by addressing its energy, environmental and nuclear
challenges through transformative science” and “to carry out the planning, coordination,
support, and management of a balanced and comprehensive energy research and development
program” including “assessing the requirements for energy research and development” and
“developing priorities necessary to meet those requirements.”6 As the global market has
drastically changed since the enactment of Bayh-Dole in 1980, DOE is implementing the U.S.
Competitiveness Provision in funding agreements to nonprofit organizations and small
business firms to better ensure DOE’s investment benefits U.S. manufacturing, industry, and
labor.
The U.S. Competitiveness Provision imposed by this Determination of Exceptional
Circumstances (DEC) will be formally incorporated into funding agreements with
Contractors7 and once incorporated into a funding agreement, may be enforced, among other
possible remedies, through forfeiture of rights to subject inventions. Except for the
requirement of manufacture substantially in the United States and the corresponding
enforcement mechanism, the patent rights granted to small business firms and nonprofit
organizations under Bayh-Dole remain the same.
In accordance with 37 C.F.R. § 401.3(e), DOE makes the following DEC, including a
supporting statement of facts and analysis.
I. The patent rights provided by Bayh-Dole may be modified to better promote the
objectives of the Act when an agency determines that "exceptional circumstances" exist.
a. Bayh-Dole provides a standard set of patent rights to certain nonprofit and
small business firm recipients of federal funds under a funding agreement.
Rights to inventions that Contractors conceive or first actually reduce to practice in
performance of work under a funding agreement ("subject inventions") are governed by Bayh-
6
42 U.S.C. §7112(5).
7
Contractor means any person, small business firm, or nonprofit organization that is a party to a funding
agreement as defined by 35 USC § 201(b).
2Dole and the federal regulations that implement Bayh-Dole.8 A "funding agreement" is "any
contract, grant, or cooperative agreement entered into between any federal agency … and any
contractor for the performance of experimental, developmental, or research work funded in
whole or in part by the Federal Government.”9
Bayh-Dole allows certain nonprofit organizations and small business firms that are recipients
of a funding agreement to elect title to their subject inventions subject to limited government
rights, and further provides that the recipients must comply with certain disclosure, patent
prosecution, and other requirements.10
b. Standard patent rights under Bayh-Dole may be modified when "exceptional
circumstances" exist and a modification would better promote the Act's
objectives.
A federal agency may restrict, eliminate, or otherwise modify rights provided to nonprofit
organizations and small business firms in "exceptional circumstances" when the federal
agency determines that a restriction, elimination, or modification of the rights and
requirements provided by Bayh-Dole would better promote the Act's objectives.11 The degree
or scope of the modification should only be to the extent necessary to address the exceptional
circumstances.12
II. Promoting domestic manufacture of products derived from federally-funded research is
a primary objective of Bayh-Dole.
A fundamental policy and objective of Bayh-Dole is to promote United States manufacturing
by encouraging the domestic manufacture of products derived from federally-funded research.
Thus, Bayh-Dole seeks "to promote the commercialization and public availability of
inventions made in the United States by United States industry and labor."13 This policy set
by Congress is directed to “inventions” and is not limited to a particular technology, consistent
with this DEC.
Bayh-Dole was enacted in 1980, in part, to address a growing concern regarding the ability of
U.S. manufacturing to compete in an increasingly global marketplace. The House of
Representatives Report filed by the Judiciary Committee when Bayh-Dole was presented to
Congress identified the need for legislation to address the "failure of American industry to
8
35 U.S.C. §§ 200-21; 37 C.F.R. § 401.
9
35 U.S.C. § 201(b).
10
Bayh-Dole does not provide large business contractors and recipients the right to elect title to subject
inventions under DOE statutory authorities. 42 U.S.C. §§ 2181 and 5908. Bayh-Dole also does not apply to
Technology Investment Agreements under DOE’s Other Transactions Authority. 42 U.S.C. § 7256.
11
35 U.S.C. § 202(a)(ii); 37 C.F.R. § 401.3(a).
12
37 C.F.R. § 401.3(b).
13
35 U.S.C. §200.
3keep pace with the increased productivity of foreign competitors."14 Bayh-Dole's passage
was spurred in part by the President's Advisory Committee on Industrial Innovation, convened
in 1978 to study the possibilities for encouraging increased productivity in the United States.
Chief among the recommendations of the committee was a legislative proposal to promote
industrial innovation through the commercial manufacture of federally-funded technologies.
The legislative proposal led to Bayh-Dole.15
III. DOE has determined that exceptional circumstances exist and Bayh-Dole’s objective of
promoting United States manufacturing and commercialization of products and
processes resulting from federally-funded research is not fully being met with respect to
DOE Science and Energy Technologies
a. Exceptional circumstances are present
As noted above, one of Bayh-Dole’s primary goals is to promote the commercialization of
federally-funded technologies by U.S. industry and labor while ensuring that the Government
obtains sufficient rights in federally-funded subject inventions to meet the needs of the
Government.16 Unfortunately, this goal has often not been realized as we have seen the
manufacturing for countless federally-funded technologies (ranging from solar technologies
to semiconductors to energy storage) increasingly offshored to locations other than the United
States over the past several decades since passage of Bayh-Dole. As explained in more detail
below, the resulting erosion of the U.S. manufacturing base and its associated manufacturing
jobs, combined with the urgent need to secure U.S. supply chains for a wide-range of
technologies has created an exceptional circumstance requiring urgent action. This urgent
circumstance is further exacerbated by the fact that several areas of science and technology
are going through disruptions that could rapidly shift the balance of global power in the 21st
Century. Since many (if not all) of these disruptive areas are funded by DOE, and since it is
often impossible to predict the next disruption, the Department has determined that issuing a
DEC for DOE’s Science and Energy Technologies will better ensure current and future
technologies are best positioned to be commercialized by U.S. industry and labor, preserving
U.S. economic leadership. This action will allow the Department to harness its
experimental, research, development, and demonstration funding to help revitalize domestic
manufacturing, secure U.S. supply chains, and create good-quality American Jobs.
The urgent and exceptional nature of the economic security challenges the U.S. faces, which
supports DOE’s determination, was recently confirmed in the Worldwide Threat Assessment
of the U.S. Intelligence Community, dated April 9, 2021.17 The assessment describes that,
14
H.R. REP. 96-1307, 1. 1980 U.S.C.C.A.N. 6460, 6460 (“Need for the Legislation: Many analysts of the U.S.
economy have warned that the roots of the current recession lie in a longer term economic malaise which arises
out of a failure of American industry to keep pace with the increased productivity of foreign competitors.”).
15
Id. at 6462. See U.S. DEPT. OF COMMERCE, ADVISORY COMMITTEE ON INDUSTRIAL
INNOVATION: FINAL REPORT (Sept. 1979).
16
35 U.S.C. §200.
17
2021-04-09 Final ATA 2021 Unclassified Report - rev 2.pdf (senate.gov).
4in emerging technologies, decades of investment and effort by multiple countries have
precipitated what DOE considers a potential tipping point of “a more level playing field” to
increasingly challenge U.S. leadership in these areas, primarily by China. "We anticipate
that with a more level playing field, new technological developments will increasingly emerge
from multiple countries and with less warning” and that ”advances in technologies such as
computing, biotechnology, artificial intelligence, and manufacturing warrant extra attention
to anticipate the trajectories of emerging technologies and understand their implications for
security.” This DEC provides an important tool for DOE to not only ensure domestic impact
but also to provide ”extra attention” or oversight of the constantly changing introduction,
trajectories, and implications of emerging technologies which may now arrive more quickly
and with less warning. The U.S. Competitiveness Provision better ensures an open dialogue
between DOE and its partners to anticipate breakthroughs and help steer their impact and job
creation in the U.S. This U.S. manufacturing and oversight tool is needed to best position
our nation to anticipate and advance U.S. economic interests.18
As DOE deepens its collaboration with the research community to accelerate science, energy,
environmental and nuclear science and technology solutions, it needs to maintain a full
awareness of the potential security threats posed by exploited U.S. intellectual property and
products, and to implement mitigation strategies to stop the unintended leakage of proprietary
research and technology to foreign competitors. This is essential not only to avert national
security risks but also to create an environment in which U.S. companies feel more secure in
realizing the benefits of their labors.
New action is needed to promote these important ends given the exceptional circumstances
that exist today. Challenges with U.S. manufacturing were noted in a 2017 publication
funded by the National Institute of Standards and Technology (NIST)19 which states:
Since 2001, the year China joined the World Trade Organization, the United
States has lost nearly one-third of its manufacturing jobs and the workers
employed in manufacturing has declined to 12 million.20 Since then, China has
become the world’s factory, now accounting for nearly half of global manufacturing
output. Dense networks of diverse suppliers in virtually every industry, combined with
18
The assessment describes the challenges China presents: ”China has a goal of achieving leadership in
various emerging technology fields by 2030. China stands out as the primary strategic competitor to the U.S.
because it has a well-resourced and comprehensive strategy to acquire and use technology to advance its national
goals, including technology transfers and intelligence gathering through a Military-Civil Fusion Policy and a
National Intelligence Law requiring all Chinese entities to share technology and information with military,
intelligence and security services.” This DEC serves as an important safeguard to help protect against such
forced technology transfer aimed at achieving China‘s 2030 goal.
19
ENSURING AMERICAN MANUFACTURING LEADERSHIP THROUGH NEXT-GENERATION
SUPPLY CHAINS JUNE 2017 REPORT NUMBER: MF-TR-2017-0201 available at
https://www.nist.gov/system/files/documents/2017/07/07/supply-chain-digital-final-june-2017.pdf
20
As reported “the number of U.S. manufacturing jobs peaked in 1979 at 19.5 million; in March 2017,
manufacturing employment was 12.4 million, a decline of more than 36 percent.”
5extensive government support, make China the world leader in manufacturing value-
added. The capability has become so great that many American startups, and even
established companies, often assume that China is where manufacturing is done.
Meanwhile, technically advanced, high-wage nations such as Germany and Japan have
maintained strong manufacturing sectors.21
The 2017 NIST publication also provides the following conclusion:
The national challenge is moving from the current situation, in which foreign suppliers
are too frequently the default choice and many domestic suppliers have weak
capabilities or no longer exist, to an innovative future supported by vibrant supply
chains in which U.S. manufacturers compete globally based on innovation and unique
domestic production capabilities.22
The U.S. Competitiveness Provision will ensure that taxpayer-funded DOE Science and
Energy Technologies create jobs here in the U.S. and help mitigate the increasing threat of
exploitation by foreign adversaries and competitors. The Director of the Federal Bureau of
Investigation testified in September 2020 before a U.S. Senate Committee that “[t]he greatest
long-term threat to our nation’s information and intellectual property and to our economic
vitality is the counterintelligence and economic espionage threat from China. It is a threat to
our economic security and by extension, to our national security.”
DOE seeks to address these challenges by securing U.S.-based supply chains for DOE Science
and Energy Technologies, which in turn protects U.S. economic and national security
interests. Without a secure supply chain, for example, secure communications, advanced
computing and next generation technologies like advanced energy storage technologies could
be significantly compromised. The U.S. Competitiveness Provision safeguard helps
cultivate and grow emerging supply chains and jobs in the U.S. at this critical point when U.S.
economic leadership is increasingly challenged and emerging breakthroughs appear with little
notice and new supply chains and related R&D ecosystems quickly begin to form around
them.
b. In light of such exceptional circumstances, DOE has determined that the
carefully tailored U.S. Competitiveness Provision will better promote Bayh-
Dole's policy and objectives
Over the past 8 years, DOE has determined that requiring enhanced U.S. manufacturing for
select programs and technologies more effectively achieves the objectives of Bayh-Dole and
DOE’s mission, while ensuring that small business firms and nonprofit organizations retain
21
As reported “According to the World Bank, manufacturing value added as a percentage of GDP in 2015 was
23% in Germany, 18% in Japan, 12% in the United States, and more than 30% in China. See
http://data.worldbank.org/indicator/NV.IND.MANF.ZS.”
22
Id.
6the right to elect title to their subject inventions. While program and technology-specific
DECs issued by the Department over that time period have acted as a stopgap, and will remain
in place, the Department has determined that exceptional circumstances now exist for a wider-
range of DOE-funded technologies. Therefore, through this DEC, DOE invokes its authority
to include the U.S. Competitiveness Provision, attached as Appendix A, in any DOE Funding
Opportunity Announcement (FOA), solicitation, announcement, notice, or specific funding
agreement for DOE Science and Energy Technologies, including but not limited to, financial
assistance transactions, acquisition contracts and laboratory or facility management and
operating contracts. The U.S. Competitiveness Provision requires that any products
embodying a subject invention or produced through the use of a subject invention be
manufactured substantially in the United States unless otherwise approved by DOE. If this
provision is breached, DOE may then obtain title to subject inventions. Like the previously
issued DECs, this DEC is also narrowly tailored such that except for the addition of the U.S.
Competitiveness Provision and its corresponding enforcement mechanism, the patent rights
granted to certain funding recipients under Bayh-Dole remain the same.
i. DOE makes significant investments in science, energy, environmental, and nuclear
science and technology solutions and continued U.S. competitiveness is necessary to
protect U.S. national and economic security interests.
The importance of having DOE Science and Energy Technologies manufactured by U.S
industry and labor has never been greater. DOE invests billions of dollars a year in science,
energy, environmental and nuclear science and technology solutions to ensure continued U.S.
leadership in these fields. DOE efforts include a broad range of science, energy,
environmental and nuclear science and technology solutions to advance DOE’s mission. The
National Strategy for critical and emerging technologies (C&ET) stressed the importance of
promoting the national security innovation base (NSIB) including a priority action to
“[s]upport the development of a robust NSIB, to include academic institutions, laboratories,
supporting infrastructure, venture funding, supporting businesses, and industry.” 23 The
strategy also stated that one way to “maintain and improve American leadership in C&ET is to
protect our technology advantage both domestically and in conjunction with like-minded
allies and partners.” The strategy identifies various priority actions in this area including those
which: (1) “[e]nsure that competitors do not use illicit means to acquire United States
intellectual property, research, development, or technologies”; and (2) “[e]nsure secure supply
chains, and encourage allies and partners to do the same.” Ensuring secure supply chains
continues to be a priority for the U.S.24
23
National Strategy for Critical and Emerging Technologies, p. 7 (October 2020).
24
The Administration reaffirmed this policy in E.O. 14005, Jan. 25, 2021, Ensure the Future Is Made
in All of America by All of America’s Workers: “It is the policy of my Administration that the United
States Government should, consistent with applicable law, use terms and conditions of Federal
financial assistance awards and Federal procurements to maximize the use of goods, products, and
materials produced in, and services offered in, the United States.” and in E.O. 14017, February 24,
7ii. An enhanced U.S. Manufacturing requirement is necessary to meet the policy and
objectives of Bayh-Dole in promoting the commercialization and public availability of
inventions made in the United States by United States industry and labor and protecting
national security interests.
Promoting the commercialization and public availability of inventions made in the United
States by United States industry and labor is a vital policy and objective of Bayh-Dole, and
exceptional circumstances today make it appropriate to promote these policies through this
DEC.25 The mission of DOE's research and development is to ensure America’s security
and prosperity by addressing its science, energy, environmental and nuclear challenges
through transformative science and technology solutions.26 A strong and vibrant domestic
manufacturing base is essential for these objectives to be met. If the U.S. cannot maintain a
manufacturing base, then it will remain dependent on foreign supplies and fail to achieve
economic, energy, and national security.
Bayh-Dole recognizes that, in exceptional circumstances and other situations, agencies need
the flexibility to adjust the standard disposition of rights between the Government and the
Contractor if the agency decides that a different disposition would “better promote” Bayh-
Dole’s objectives and policies. The Act provides DECs, for example, as a tool for agencies
to balance the Government’s and the Contractor's rights if the circumstances are exceptional,
and if an agency determines that the restriction, i.e., here, the U.S. Competitiveness Provision,
will “better promote the [Act’s] policy and objectives,” including “to promote the
commercialization and public availability of inventions made in the United States by United
States industry and labor,” and "to ensure that the Government obtains sufficient rights in
federally supported inventions to meet the needs of the Government and protect the public
against nonuse or unreasonable use of inventions.” In this way, the Act acknowledges that
agency DECs may more effectively achieve, and, in fact, must “better promote,” the
objectives of Bayh-Dole in these unique circumstances compared to the standard rights
disposition.
While Bayh-Dole contains a limited domestic manufacturing restriction on granting certain
exclusive licenses, 27 DOE has determined that a broader yet flexible and tailored U.S.
Competitiveness Provision balances and ”better promotes“ the goals of the Act and the DOE
2021, America’s Supply Chains: More resilient supply chains are secure and diverse—facilitating
greater domestic production, a range of supply, built-in redundancies, adequate stockpiles, safe and
secure digital networks, and a world-class American manufacturing base and workforce. Moreover,
close cooperation on resilient supply chains with allies and partners who share our values will foster
collective economic and national security and strengthen the capacity to respond to international
disasters and emergencies. Therefore, it is the policy of my Administration to strengthen the resilience
of America's supply chains.
25
35 U.S.C. §200.
26
https://www.energy.gov/about-us.
27
35 U.S.C. § 204 often referred to as the “U.S. Preference Clause”.
8mission. Given the challenges and stakes presented by the exceptional circumstances
described above in emerging technologies, as well as in present and future U.S. supply chains,
the Act’s goals are better achieved with the U.S. Competitiveness Provision than with an
exclusive license (U.S. sale and use) restriction. Entities other than exclusive U.S. rights
licensees, such as Contractors and other licensees, may play decisive roles in technology
commercialization and availability plans and activities. A more comprehensive yet targeted
approach to U.S. manufacturing using the U.S. Competitiveness Provision is warranted in the
current exceptional environment of unprecedented challenges to U.S. manufacturing and
economic leadership.
The strengthened U.S. Competitiveness Provision better ensures commercialization of DOE-
funded technologies by U.S. industry and labor. Furthermore, the U.S. Competitiveness
Provision allows DOE review and oversight when a Contractor undergoes a change in
ownership amounting to a controlling interest, or when inventions are transferred. This
protects against foreign entities acquiring rights to federally-funded technologies through
stock/asset purchases and bankruptcy proceedings and then moving the manufacturing of such
technologies offshore. These enhancements, particularly needed in today’s exceptional
circumstances, allow DOE to ensure America’s security and prosperity, while allowing
flexibility when needed for commercialization.
To address the limitations of U.S. Preference arising out of Bayh-Dole, DOE has issued
several DECs over the past eight (8) years to protect domestic manufacturing for specific
programs/technologies including.
• “EXCEPTIONAL CIRCUMSTANCES DETERMINATION UNDER BAYH-
DOLE FOR ENERGY EFFICIENCY, RENEWABLE ENERGY, AND
ADVANCED ENERGY TECHNOLOGIES” issued on September 19, 2013 for
inventions in the fields of energy efficiency, renewable energy, and advanced
energy technologies. This DEC relied on the development of U.S. Manufacturing
Plans as discussed below, while allowing for the U.S. Competitiveness Provision.
• “DETERMINATION OF EXCEPTIONAL CIRCUMSTANCES UNDER THE
BAYH-DOLE ACT FOR THE OFFICE OF CYBERSECURITY, ENERGY
SECURITY, AND EMERGENCY RESPONSE” issued on January 10, 2020 for
cybersecurity, energy security, and emergency response technologies that secure
the nation’s energy infrastructure from energy disruptions from cybersecurity
incidents to better enable DOE to prevent, mitigate, respond to, and facilitate
recovery from these energy disruptions.
• “DETERMINATION OF EXCEPTIONAL CIRCUMSTANCES UNDER THE
BAYH-DOLE ACT FOR QUANTUM INFORMATION SCIENCE
TECHNOLOGIES” issued on September 16, 2020 for Quantum Information
Science (QIS) technologies and applications.
9DOE tailored each of these DECs to a reasonable and flexible restriction that is far less than
title forfeiture to ensure that only modifications necessary to address the exceptional
circumstances or concerns which led to the use of the exception were deployed for these
program-specific projects.28 In view of the above and the increasingly rapid changes to the
global landscape, DOE needs to avail itself of the authority provided by Bayh-Dole to address
exceptional circumstances by expanding the use of the U.S. Competitiveness Provision to
protect domestic manufacturing, not only to better meet the policy and objective of Bayh-
Dole and fulfill its mission, but also to address the critical concerns expressed in E.O. 14017.
The need for the U.S. Competitiveness Provision is particularly strong for emerging
technologies which, by their nature, are cutting edge and thus not always identifiable in
advance.
Even under these increasing pressures, this DEC is specifically structured so that DOE may
limit its application when circumstances warrant, such as upon a determination that in
individual cases, the exceptional circumstances outlined above may not be present. Even
when it does apply, the U.S. Competitiveness Provision and enforcement provision are
narrowly crafted without any other changes affecting Contractor rights. This DEC is
permissive and allows DOE to omit the U.S. Competitiveness Provision in funding
agreements. For example, DOE may decide it is not warranted to require the U.S.
Competitiveness Provision in funding agreements for certain technologies, especially certain
basic science technologies.
While existing program/technology specific DECs have been successfully implemented, it
has become clear to DOE that a DEC covering all of DOE’s Science and Energy Programs is
necessary to better achieve the policies and objectives of Bayh-Dole for DOE Science and
Energy Technologies in light of the exceptional circumstances discussed. This DEC will
ensure that DOE has the flexibility to require a U.S. Competitiveness Provision or U.S.
Manufacturing Plan for any DOE Science or Energy Technology, thereby ensuring that DOE-
funded technologies, including emerging technologies with the ability to significantly affect
important national and/or economic security interests, are commercialized by U.S. industry
and labor, further ensuring secure supply chains for critical and emerging technologies while
furthering U.S. economic and national security interests.
Furthermore, by having consistent terms for all funding agreements where exceptional
circumstances are present (including DOE funding agreements to entities other than nonprofit
organizations and small business firms) the administrative burden may be significantly
reduced for all parties. DOE and its partners, including nonprofit organizations and small
business firms, are already familiar with the U.S. Competitiveness Provision having been
successfully included for years in the above mentioned DECs, as well as other DOE
agreements. DOE has, for example, required substantial U.S. manufacturing similar to the
U.S. Competitiveness Provision for decades in funding agreements with large businesses,
28
37 C.F.R. § 401.14(b).
10implemented through DOE’s patent waiver authorities. 29 This provision has protected
domestic manufacturing by ensuring investment in domestic manufacturing and industry is a
primary consideration. Although the substantial U.S. manufacturing requirement is
typically accepted by large businesses, waivers and modifications are granted as appropriate.
For at least these reasons, the current state of domestic manufacturing for science, energy,
environmental, and nuclear science and technology solutions makes clear that Bayh-Dole's
policy and objective of promoting U.S. manufacture and commercial deployment of subject
inventions has not been adequately achieved given the exceptional circumstances described.
Therefore, the U.S. Competitiveness Provision must be deployed to protect domestic
manufacturing.
iii. Congress recognizes the need to promote U.S. Competitiveness through DOE’s
investment in science, energy, environmental, and nuclear science and technology
solutions.
In the House Report accompanying the 2013 Energy and Water Appropriations Bill, the
Committee on Appropriations identified the specific need for DOE to take a leadership role
in improving U.S. manufacturing and domestic intellectual property retention:
The Department’s research and development efforts yield several thousand patents and
licenses each year, and taxpayers expect their support to result in commercialized
technologies that benefit both American consumers and American industry. This
expectation is not met when intellectual property that was developed with public
funding is commercialized only by foreign manufacturers. The Committee believes
that intellectual property policies offer substantial opportunities to encourage
domestic manufacturing without obstructing commercial efficiency, eroding the
value of intellectual property, or under-mining free trade. The technology transfer
efforts of the Department should support domestic manufacturing wherever possible
and DOE must take proactive steps to ensure taxpayer-funded research and
development result in domestic jobs and revenues.30 (emphasis added)
The Committee requested that DOE examine what authorities are available to control
intellectual property, specifically including Bayh-Dole.31 They recognize that it is critical that
technologies funded by DOE support manufacturing in the United States, particularly in view
of the necessity of creating and maintaining jobs, including manufacturing jobs, in the U.S.
29
e.g., 10 CFR § 784 et seq.
30
H. Rept. 112-462 - ENERGY AND WATER DEVELOPMENT APPROPRIATIONS BILL, 2013 at page
81.
31
Id.
11IV. DOE may require the U.S. Competitiveness commitment to help maintain U.S.
competitiveness and leadership in science, energy, environmental, and nuclear science
and technology solutions.
a. DOE may incorporate the U.S. Competitiveness Provision in any DOE FOA,
solicitation, announcement, notice, or specific funding agreement.
DOE may require incorporation of the U.S. Competitiveness Provision in Appendix A for
funding agreements issued to Contractors as designated in any DOE Science and Energy
Technology FOA, solicitation, announcement, notice, or specific funding agreement,
including but not limited to, financial assistance transactions, acquisition contracts, and
laboratory or facility management and operating contracts (e.g. DOE Acquisition Letter). The
U.S. Competitiveness Provision requires that any products embodying any subject invention
or produced through the use of any subject invention will be manufactured substantially in the
United States unless the Contractor can show to the satisfaction of the DOE that it is not
commercially feasible. A similar provision is already incorporated into large-business
funding agreements through the DOE’s patent waiver process.
Additionally, for funding agreements in existence prior to approval of this DEC, 37 CFR §
401.3(d) authorizes DOE to negotiate the insertion of the U.S. Competitiveness provision
described in Appendix A task-orders/modifications added to a funding agreement after the
initial award, including, but not limited to, contracts for the management and operation of
DOE’s National Laboratories.
Prioritizing U.S. manufacture will help ensure that essential science, energy, environmental
and nuclear science and technology solutions will be manufactured and deployed in the U.S.,
providing not only valuable economic benefit to the U.S. but also ensuring that the U.S. has
key production and workforce capabilities to protect our national security interests and critical
national economic interests, for example, as described in the National Strategy for Critical
and Emerging Technologies, the National Strategic Overview for Quantum Information
Science, and the National Quantum Initiative Act, while also providing the flexibility
necessary to ensure a research environment conducive to discovery and collaboration. DOE
has determined that the U.S. Competitiveness Provision is necessary.
b. The U.S. Competitiveness Provision will be enforceable to protect the nation’s
interests.
DOE will amend the patent clause of any funding agreement for DOE Science and Energy
Technologies including the U.S. Competitive Provision to grant DOE the right to obtain title
to the subject invention (e.g., title reverts back to DOE) if a Contractor fails to comply with
the requirement to substantially manufacture a subject invention in the U.S., absent any DOE-
approved waiver or modification. This right to obtain title for a breach of the U.S.
Competitiveness Provision will provide DOE a quick and effective enforcement mechanism
similar to other available remedies under Bayh-Dole.
12c. Waivers and modifications are available.
Recognizing the need for flexibility, DOE will accept applications from Contractors for a
waiver or modification of the requirements under the U.S. Competitiveness Provision. All
applications for a waiver or modification will be considered. DOE expects to modify the
U.S. Competitiveness Provision in certain situations. This DEC authorizes modification of
the U.S. Competitiveness Provision to reduce requirements when doing so will facilitate or
promote commercialization. For example, DOE may authorize certain technologies or
products be manufactured outside the U.S. in certain quantities, fields of use, or for certain
time periods. Additionally, administrative changes may be made to the U.S.
Competitiveness Provision, for example to clarify funding agreement requirements, provide
contact information, or to reduce requirements of the provision as appropriate.
Any waiver or modification of the U.S. Competitiveness Provision must consider the factors
described below as well as substantial U.S. economic benefits. DOE, in its sole discretion,
through the cognizant DOE funding program, and with the concurrence of the DOE Assistant
General Counsel for Technology Transfer and Intellectual Property (GC-62), may grant such
waiver or modification requests. GC-62 may delegate such concurrence approvals to DOE
Field Patent Counsel as the Assistant General Counsel for Technology Transfer and
Intellectual Property deems appropriate. DOE offices will be encouraged to provide funding
agreement specific information for the waiver process including contact information for local
field patent counsel and program approval information. Contractors may address in writing
to DOE, and DOE may consider, the following factors in such requests, for example:
(1) the extent to which the request supports the objectives of DOE’s mission;
(2) the commercial feasibility of manufacturing the subject invention in the U.S.,
including the feasibility of developing all or part of the related supply chain(s)
in the U.S.;
(3) any reasonable efforts to substantially manufacture the subject invention in the
U.S., including licensing U.S. firms for manufacturing;
(4) legally enforceable commitments proposed by the recipient to provide
alternative benefits to the U.S. economy and industrial competitiveness
preferably related to the commercial use of the subject invention, e.g., direct or
indirect investment in U.S.-based plant and equipment, creation of high-quality
U.S.-based jobs, and further domestic development of the subject invention
technology;
(5) the geographic, technological, commercial, and temporal scope of the requested
waiver compared to any proposed contractual or other benefits;
(6) agreement by the Contractor to provide at least a non-exclusive license with
commercially reasonable terms to any Contractor agreeing to the U.S.
Competitiveness Provision; and
(7) any other such factors that may be relevant.
13DOE may also consider whether such requests present any risk of unauthorized or other
transfer of subject invention rights or information which may result in a loss of benefits to the
U.S. economy or other harm to U.S. competitive or economic interests. DOE funding
programs may issue their own guidance on waiver or modification requests, which may or
may not include the above factors, through FOA, solicitation or other announcement
language, program-specific waiver forms, or other mechanisms. Therefore, this narrowly-
tailored U.S. Competitiveness Provision protects the nation’s interests, while having
streamlined flexibility to balance U.S. manufacturing interests with commercialization
interests when the technology is ready for commercialization.
These considerations must be made expeditiously to facilitate commercialization.
Therefore, DOE plans to issue internal instructions for the collection, review, and timely
response to requests to waive or modify the U.S. Competitiveness Provision. Additionally,
DOE may leverage upcoming updates to the iEdison invention reporting and patent tracking
system to allow for electronic receipt of requests for waivers of U.S. manufacturing, thereby
facilitating Contractor applications for waivers or modifications.
The cognizant DOE funding program, with the concurrence of the DOE Assistant General
Counsel for Technology Transfer and Intellectual Property (GC-62) may waive or modify the
U.S. Competitiveness Provision for a particular award or a class of awards as necessary to
accommodate effective commercialization. GC-62 may delegate his/her authority to DOE
field Patent Counsel. Depending on the nature of the FOA, solicitation, or other
announcement, DOE may require or allow a U.S. Manufacturing Plan from each applicant as
part of its application in addition to or, if the cognizant program office approves, in lieu of the
U.S. Competitiveness Provision. The U.S. Manufacturing Plan will represent the applicant's
measurable commitment to support U.S. manufacturing of the technologies resulting from any
subsequent DOE funding agreement. The U.S. Manufacturing Plan requirement shall apply
equally to all types of applicants, including large businesses, small business firms, and
nonprofit organizations. Once incorporated into a funding agreement, the U.S. Manufacturing
Plan will provide that it may be enforced, among other possible remedies, through forfeiture
of rights to subject inventions.
V. Conclusion
DOE has determined that exceptional circumstances exist for DOE Science and Energy
Technologies. Enabling use of the U.S. Competitiveness Provision described herein via this
comprehensive DEC will better promote the objectives of Bayh-Dole in light of those
circumstances by providing stronger support to U.S. economic and national security,
commercialization of federally-supported inventions, U.S. industry, labor, and U.S.
manufacturing. Moreover, this narrowly-tailored DEC does not impose additional restrictions,
requirements, or modifications from the standard patent rights clause beyond what is
necessary to address the exceptional circumstances.
14Any Bayh-Dole entity affected by this determination of exceptional circumstances has the
right to appeal it.32
Other DOE program offices may approve this DEC by signature of this approval page by the
cognizant Under Secretary or Head of Departmental Element including additional supporting
information, if any, with written notification to the Secretary and a copy to the Assistant
General Counsel for Technology Transfer and Intellectual Property.
Approved: Date: June 3, 2021
KATHLEEN HOGAN
ACTING UNDER SECRETARY FOR
SCIENCE AND ENERGY
Approved: Date: June 3, 2021
JENNIFER GERBI
ACTING DIRECTOR
ARPA-E
John T. Digitally signed by
John T. Lucas
Approved: Lucas Date: 2021.06.07
13:20:18 -04'00' Date:
JOHN T. LUCAS
DEPUTY GENERAL COUNSEL
FOR TRANSACTIONS,
TECHNOLOGY, & CONTRACTOR
HUMAN RESOURCES
32
See 35 U.S.C. § 202(b)(3); 37 C.F.R. § 401.4.
15Appendix A
U. S. Competitiveness
The Contractor agrees that any products embodying any subject invention or produced
through the use of any subject invention will be manufactured substantially in the United
States unless the Contractor can show to the satisfaction of DOE that it is not commercially
feasible. In the event DOE agrees to foreign manufacture, there will be a requirement that
the Government's support of the technology be recognized in some appropriate manner, e.g.,
alternative binding commitments to provide an overall net benefit to the U.S. economy. The
Contractor agrees that it will not license, assign or otherwise transfer any subject invention to
any entity, at any tier, unless that entity agrees to these same requirements. Should the
Contractor or other such entity receiving rights in the invention(s): (1) undergo a change in
ownership amounting to a controlling interest, or (2) sell, assign, or otherwise transfer title or
exclusive rights in the invention(s), then the assignment, license, or other transfer of rights in
the subject invention(s) is/are suspended until approved in writing by DOE. The Contractor
and any successor assignee will convey to DOE, upon written request from DOE, title to any
subject invention, upon a breach of this paragraph. The Contractor will include this
paragraph in all subawards/contracts, regardless of tier, for experimental, developmental or
research work.
(End of clause)
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